Cleantech companies look to follow SolarCity to IPO

The San Mateo solar installer had a difficult journey to becoming a public company this week, but the deal is viewed as a success in the beleaguered clean energy technology industry and good news for start-ups hoping to ride its coattails to public offerings next year.

Venture capitalists have poured billions of dollars into solar, smart grid and other energy technology companies over the last few years, with little to show for it. The industry has had only a few IPOs, many of which fared poorly in the weeks and months after their debuts due to a weak global economy, slower-than-expected adoption of new technologies and stiff competition in the solar industry.

Solar panel manufacturers dominate the list of publicly traded clean-tech firms, and the MAC Global Solar Energy index has lost 95 percent of its value since 2008.

SolarCity is an installer, not a panel manufacturer. Nevertheless, skittishness about the dismal performance of solar stocks forced the company to cut the price of its initial public offering to $8 a share from a previously planned range of $13 to $15 a share.

The company went ahead with its plans at the lower valuation, and several investors, instead of selling, made plans to buy shares in the offering, and the stock climbed nearly 50 percent on its first day of trading.

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"People are going to point to the 30-plus percent discount as almost a disaster, but in this type of an environment, especially with solar, getting it out the door and being able to let them prove their business model is good for the industry," said Robert W. Baird analyst Ben Kallo. He added that companies with business models similar to SolarCity's will probably keep an eye on the stock's performance for the next quarter or two as they weigh their own IPO plans.

SunRun, a SolarCity competitor, has no near-term plans to go public, co-Chief Executive Lynn Jurich said in an interview. Jurich, said, however, that SolarCity's IPO would help educate investors about parts of the industry that are thriving.

"One of the big barriers for us in growth is continuing to raise enough capital," Jurich said. "So the validation that it gets into the Wall Street community is going to be beneficial."

Several startups with their own public market aspirations have been watching SolarCity's experience this week.

Opower, a company that helps utility customers cut their energy bills, is likely to go public next year, a source familiar with the situation said. Opower CEO Dan Yates said the company was talking about a potential IPO, but had not yet identified a timetable.

Silver Spring Networks, a smartgrid company that has delayed an IPO for more than a year, will resurrect its IPO early next year, the source said. A company spokesman would not comment.

Bloom Energy, a company that creates fuel-cell boxes that can power big data centers and the like, will likely attempt an IPO in late 2013 or early 2014, according to Scott Sandell, a general partner with Bloom investor New Enterprise Associates.

But SolarCity CEO Lyndon Rive said companies looking to launch IPOs should be prepared to show strong business models -- and take lower valuations than they might hope for.

"If the fundamentals are there, they might not get the numbers they want but it will be a success," Rive said in an interview following SolarCity's IPO. "Investors' appetite for risk in the clean-tech sector is extremely small."

Electric car company Tesla Motors (TSLA) Inc, which like SolarCity is backed by technology entrepreneur and Paypal founder Elon Musk, is widely considered the industry's lone public markets success story. Its stock has doubled since going public in June of 2010.

It's too soon to tell whether SolarCity will be judged a success, like Tesla, but industry players are optimistic that the company's market debut will help alleviate the fog that has hung over clean-tech, generally, and solar, in particular.

"Any positive news, such as a successful IPO, is going to help educate investors," said Paul Nahi, chief executive of Enphase Energy Inc, which makes microinverters for solar energy systems and whose stock is down 45 percent since its March IPO. "Hopefully it will give them a reason to take a look at solar in a new light and see that there can be some big successes here."